U.S. housing recovery not as solid as it looks 25 Oct 2012 Prices are up 4 pct. But cash-rich buy-to-rent investors, not consumers, seem to be behind the uptick. Blackstone is snapping up 666 houses a week. While helpful and done with no taxpayer aid, if investor interest dries up before individuals jump back in, the recovery may falter.
New York Times cash can stretch only so far 25 Oct 2012 The U.S. newspaper publisher’s ugly Q3 erased about 15 pct of its market value and put further demands on a roughly $1 bln war chest. Shareholders, including the Sulzberger family, will want a dividend and pension funds are short. The Times, however, could use the cushion.
Lazard advises Wall Street on how to take the pain 25 Oct 2012 Christmas came early for activist Nelson Peltz, if not some of Lazard’s employees. The firm will slice $125 mln in expenses by year-end. Though Lazard still pays out more to staff than rivals, the move is consistent with CEO Ken Jacobs’ goal to boost returns for shareholders.
Upbeat Unilever shows dangers in generalities 25 Oct 2012 A weak season for corporate earnings is creating new nervousness in the world’s leading equity markets. But the pleasant surprise just served up by Unilever shows what can be missed in broad brush impressions. Take your lead from averages, and your returns may be somewhat mean.
Conoco already falling behind new chosen peer 25 Oct 2012 After shedding its refineries in May, the energy explorer set its earnings to coincide with new rival Occidental. Conoco’s Q3 profit of $1.8 bln beat expectations. But output slipped, while at Oxy production increased 4 pct. Conoco has its work cut out to keep shareholders happy.
Gupta insider trading sentence apt but incomplete 25 Oct 2012 The former McKinsey boss and Goldman director asked to be allowed to help Rwandans. Instead he got two years in the slammer. His request oozed chutzpah but made a useful point. Ideally, sentences should punish crooks but also exploit their skills. This one goes only half way.
Why do investors prefer Amazon to Apple? 24 Oct 2012 Sure, the gadget maker’s market value is far larger. Yet investors are willing to pay almost nine times as much for the retailer’s estimated earnings. That’s expensive in any case. But it’s also odd, because Amazon perpetually promises more jam tomorrow, while Apple delivers it.
Fed may hike rates sooner than it reckons 24 Oct 2012 The FOMC’s sticking with its near-zero target till 2015. But after the presidential election longer-term savings and inflation risks of current policies may be more salient than short-term jobless trends. If so, the Fed may soon raise rates, no matter who wins the White House.
Ethical economy: Unrealistic Nobel economics 24 Oct 2012 The latest prize rewarded the study of stable pairwise matching. Like so much of game theory, the winning idea is simple, slightly illuminating for economists, occasionally useful for everyone - and profoundly misleading. People should not be reduced to calculating machines.
Facebook shows signs of answering mobile question 24 Oct 2012 The social network’s mobile ad business grew sixfold in three months and provided 14 pct of ad sales in Q3. Worries remain about durability, cost control and competition. But for the first time, the shift to mobile devices seems an opportunity for Facebook rather than a threat.
Apple takes lower-priced tablet fight to Amazon 23 Oct 2012 The new iPad mini takes Apple closer to the price point for the online retailer’s devices. The iPhone maker is risking some cannibalization, and possibly lower margins. But for Amazon, selling content is all-important. The new hardware rivalry could trigger price cuts.
Last U.S. debate neglects foreign policy realities 23 Oct 2012 Listening to Barack Obama and Mitt Romney spar, it would have been easy to forget that Europe exists, free trade matters or global coordination of finance remains a priority. Worse, the politically facile China-bashing suggests both men are missing the big opportunity.
Equities business hits the pain threshold 23 Oct 2012 The cash equities model is broken. An industry plagued by overcapacity and weak profitability can’t cope with higher costs and lower volumes. Some investment banks are trimming equities headcount, when they really need to decide whether they should be in the business at all.
It’s not too late to choose an Economic Dream Team 22 Oct 2012 As the U.S. presidential candidates head to their final debate, we’ve added new choices for key economic jobs. Should financial reformer Barney Frank have a spot? Can deficit hawk Martin Feldstein, or Treasury’s No. 2 Neal Wolin, help fix the U.S. fiscal mess?
Farallon founder navigates hedgie succession trail 22 Oct 2012 Hedge fund moguls aren’t known for achieving smooth transitions to new management. Some struggle to let go, fail to retain would-be successors, or see investors flee. But Tom Steyer, who started the $20 bln San Francisco-based Farallon, seems to have checked the right boxes.
Goldman exposé doesn’t go according to plan 22 Oct 2012 Greg Smith’s resignation book doesn’t blow the lid on Wall Street the way “Liar’s Poker” did. Even his purported tale of disillusionment has been done before and better by Goldman veteran Jonathan Knee. The real revelation is the firm’s apparent erosion of employment standards.
Moody’s-S&P spats offer fix to ratings conflicts 22 Oct 2012 Moody’s has publicly trashed its rival’s work on a mortgage bond, the second such squabble in two weeks. Companies may now fear getting punished for cherry picking the most favorable rater. But that’s the best antidote yet to the ratings business’s inherent conflicts of interest.
McGovern embodied U.S. economic left’s last stand 22 Oct 2012 The South Dakota senator, who died on Sunday, lost the 1972 presidential election on a platform proposing the government as employer of last resort. That did not seem wild when communist regimes had full employment. McGovern has no heirs in America’s political mainstream today.
Even GE can’t beat sluggish global growth 19 Oct 2012 The U.S. conglomerate and economic bellwether missed third-quarter revenue estimates, putting it in the same camp as more than half the nation’s top companies. Cutting costs and shrinking assets only does so much. Economic growth provides the real juice. That’s in short supply.
Internet parasitism powers Barry Diller’s returns 19 Oct 2012 IAC is abandoning Newsweek in print as the mogul’s web businesses flourish. An online search boom has powered the $4.6 bln firm’s stock this year. But much of the growth seems driven by customers unwittingly downloading IAC toolbars. It’s a risky way to build a lasting business.